The monitoring and verification of inventory is a necessity in a wide variety of industries. Virtually every manufacturer who stores his goods in a warehouse, factory, or assembly plant for any period of time must monitor and verify the type and quantity of goods in inventory. This process is not limited to those who make their own products. For instance, where a softdrink company uses outside bottlers to manufacture its product, the softdrink company must periodically visit the bottler to establish raw material usage and actual finished product inventory. Still further, finance companies who rely on the goods in the possession of a dealer as collateral must frequently establish the location and condition of such goods.
Typically, the inventory is performed from an Inspection Checklist which is produced by computers. In many cases, checklists are prepared periodically, so the status at any given moment can only be determined as recently as the completion of the most recent checklist. Furthermore, a checklist may be as many as 7 to 10 days old at the beginning of the inventory.
When the physical inventory is complete, all items not found, which have not been paid off, are noted. These items require reconciliation with the dealer's records. In many audits the list of items is so large that the auditor must spend a significant amount of time reviewing the items on the checklist to ensure that all applicable items are reconciled with the dealer.
Frequently, the reconciliation process requires more time than the physical inventory. Because of the intense concentration involved, the size of the inventory and the number of handwritten comments and codes, items that have already been sold may be missed by the auditor. In such situations, no collection is made for these items and the finance company is subject to financial loss.
The problem of tracking and accounting for inventory is increased in factory and assembly settings where parts are not always maintained in individual or separate form. As parts are used to form assemblies, the individual raw components are more difficult to track. Further paper inventories do not lend themselves to tracking rates of consumption and automatic generation of bills of material.
What is needed in the art is a way to provide the traceability of a product and efficient factory operation. This is particularly important in the production of medical devices and computer mass storage devices. Further, there is a need for more efficient auditing and verification of component usage in production of finished goods.